As the financial centre of the Gulf and the United Arab Emirates (UAE), it didn't take Dubai long to bounce back from the global financial turmoil. A steadily growing oil price and a strict policy of fiscal prudence soon saw the emirate climbing back to its original prominence.

Dubai's economic relationship with Hong Kong has long been healthy. In concert with the global economic recovery, Hong Kong's imports from Dubai increased by more than 37 per cent in the first 10 months of this year, to US$1.45 billion, while exports to the UAE also rose to reach US$1.6 billion in the same period.

After a less than stellar performance last year, the UAE as a whole is expected to see real GDP growth of 2.4 per cent this year, according to IMF estimates. With the oil and gas sector accounting for more than 35 per cent of the country's GDP, higher prices for both commodities is forecast to bolster the continued recovery.

The Global Competitiveness report 2010-2011 issued by the World Economic Forum ranked the UAE 25th in the world, with the UAE being included for the second year in the third and most advanced stage of 'innovation-driven economies', which includes the highest-ranking countries.

Foremost of the seven emirates that make up the UAE, Dubai and Abu Dhabi account for most of the country's GDP.

According to information from the government, last year the UAE's gross national product (GNP) amounted to 914.4 billion dirhams (HK$1.93 trillion) and is expected to cross the 1 trillion dirham mark by the end of this year. The two emirates differ in terms of economic development - Abu Dhabi, which owns the majority of the country's oil and gas reserves, focuses on energy-based industries, while Dubai is renowned for its commercial and financial services, and tourism, logistics and trading. Dubai's oil and gas sector plays a lesser part in its economy.

The UAE is planning to reduce the contribution from the oil and gas sector to about 20 per cent of its GDP, and diversify its economy by developing trading, financial and technological industries, and tourism.

To achieve this, the government has invested a massive amount of capital in infrastructure projects in a bid to make the country a tourism, business and financial centre. Tourism in Dubai has made considerable strides over the past decade. Guest arrivals at Dubai hotels jumped from three million in 1999 to 7.6 million last year.

Dubai has also emerged as an important trading hub in the region. Its container throughput rose from 6.4 million TEUs to 11.1 million TEUs between 2004 and last year, up more than 70 per cent, making it the seventh busiest seaport in the world last year.

The government continues to throw its weight behind free zone developments.

There are now more than 30 in the UAE and many have specialised themes such as finance, logistics, media, healthcare, textiles and automobiles.

Companies in free zones enjoy 100 per cent foreign ownership, and benefit from zero corporate tax, customs duty, currency restrictions, labour restrictions, trade barriers and quotas. Dubai's Jebel Ali Free Zone is one of the largest and most successful and has attracted more than 6,400 companies from around the world. Jebel Ali accounts for about half of Dubai's total exports, and 20 per cent of all foreign direct investment inflow in the UAE.

As far as Hong Kong is concerned, the UAE remains its largest export market in the Middle East. Up to the end of October, major export items included telecommunications equipment and parts (US$297 million, 18.6 per cent of the total), pearls, precious and semi-precious stones (US$252 million, 15.7 per cent), and non-electric engines and motors and their spare parts (US$210 million, 13.1 per cent).

In the other direction, Hong Kong's chief imports from the UAE were pearls, precious and semi-precious stones (US$448 million, 30.8 per cent of the total), telecommunications equipment and parts (US$333 million, 22.9 per cent) and non-electric engines, motors and parts (US$221 million, 15.2 per cent).

The UAE is a prominent member of the World Trade Organisation, and maintains a liberal trade regime. Imports are subject to very few controls except for the import of arms and ammunition, alcoholic beverages, agricultural pesticides, narcotics and pork products. And, while there are no exchange controls in the UAE, all importers have to apply for a licence, and an importer can import only those goods specified in the licence.

The UAE continues to maintain a significant presence in Hong Kong, with more than a dozen companies represented, including five regional and nine local offices, featuring organisations including the National Bank of Abu Dhabi, Mashreq Bank and Emirates Airlines.